The Supreme Court upheld the Intellectual Property High Court (IPHC)’s decision (2023 Na 10204), ordering SMT Corporation (“SMT”), a Korean small and medium-sized enterprise, to pay approximately KRW 3.4 billion (USD 2.34 million) in damages for indirect infringement of patent rights of Lam Research, a U.S. semiconductor equipment company (Supreme Court decision 2024 Da 230695).
The product at issue in this case is the "stud/socket assembly" manufactured by SMT and serves as a component exclusively used in Lam Research’s patented product, the "cam lock clamp." In February 2017, SMT produced and sold the "stud/socket assembly" to semiconductor manufacturers that received "cam lock clamps" from Lam Research. Furthermore, SMT promoted the use of its product in Lam Research’s product line on its website.
Lam Research filed a patent infringement lawsuit, arguing that because SMT’s stud/socket assembly was designed to be exclusively used in the production of Lam Research’s patented invention, the "cam lock clamp" (Korean Patent No. 10-1708060), SMT’s actions of manufacturing and selling constituted indirect infringement of Lam Research’s patent.
In this regard, SMT argued that the act of replacing the "stud/socket assembly," a simple component for the equipment purchased by domestic semiconductor manufacturers from Lam Research, with SMT’s product did not constitute direct infringement of Lam Research’s patent under the doctrine of patent exhaustion. Therefore, SMT contended that the act of manufacturing and selling its product, which replaced such a simple component, should not be considered indirect infringement of Lam Research’s patent.
However, the IPHC recognized SMT’s indirect infringement, concluding that SMT’s stud/socket assembly is exclusively used in the production of Lam Research’s cam lock clamp for the following reasons:
1) SMT’s "stud/socket assembly" is substantially identical to the core and essential component of Lam Research’s patented invention.
2) SMT explicitly promoted that its product was used in Lam Research’s product line.
3) SMT never argued that its "stud/socket assembly" was used for any other purpose.
4) The "stud/socket assembly" included in Lam Research’s "cam lock clamp" is a consumable part, expected to be periodically replaced at the time of purchasing the cam lock clamp. Lam Research separately manufactured and sold the “stud/socket assembly” for its customers.
Additionally, the IPHC determined that if a consumer who purchased Lam Research’s "cam lock clamp" replaces its component with SMT’s "stud/socket assembly," it is difficult to consider that the “cam lock clamp” before and after the replacement maintains its identity. Therefore, such replacement exceeds the permissible scope of repair during use and constitutes a new act of manufacturing. As a result, the IPHC rejected SMT’s argument that the act of manufacturing and selling its product did not infringe on Lam Research’s patented invention under the doctrine of patent exhaustion.
SMT appealed the IPHC’s decision to the Supreme Court, but the Supreme Court dismissed the appeal without hearing it. Therefore, the IPHC’s decision is final and conclusive. As a result, in cases where a part used in the semiconductor manufacturing equipment is a consumable part that needs to be periodically replaced, the patent exhaustion theory is interpreted restrictively, and the doctrine of indirect infringement is applied based on patent rights for semiconductor equipment. This has made it easier to protect and enforce patent rights for key components of semiconductor equipment. This ruling, particularly by the Supreme Court, set an important precedent that could strengthen the position of global semiconductor equipment manufacturers in patent disputes with Korean companies.
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